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Inflation Hits 3 Percent for First Time Since June 2024; Fact- Checking Elon Musk's Oval Office Claims; DOGE Subcommittee Holds Hearing Amid Efforts to Upend Government. Aired 10-10:30a ET

Aired February 12, 2025 - 10:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

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[10:00:00]

PHIL MATTINGLY, CNN ANCHOR: Finally free. American Marc Fogel is back on U.S. soil after spending more than three years wrongfully detained in Russia.

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MARC FOGEL, AMERICAN FREED FROM WRONGFUL DETENTION IN RUSSIA: I feel like the luckiest man on Earth right now.

The love that I was given sustained me for three and a half years.

(END VIDEO CLIP)

MATTINGLY: As President Trump says, another American could be released today.

Plus, as transparent as possible, that's how Elon Musk is defending his role in government. And yet multiple lawmakers say they are getting no heads up on what his DOGE team is doing. Senator Chris Van Hollen will join me live to react.

And later, an out of this world. First for NASA, a Twitch live stream with astronauts from the International Space Station. We're going to bring it to you live.

Good morning. Pamela Brown is off. I'm Phil Mattingly in Washington and you are live in the CNN Newsroom.

And we begin with the breaking news, the markets reacting right now to the first big inflation report of 2025. The Dow down, you'd see there, a little over 400 points. NASDAQ and S&P both down as well. This is after that critical inflation report showing inflation is going in the wrong direction, hitting 3 percent for the first time since June.

I want to bring in CNN's Vanessa Yurkevich. She's going to break down all the numbers. What are we seeing here, Vanessa?

VANESSA YURKEVICH, CNN BUSINESS AND POLITICS CORRESPONDENT: Yes, we're seeing inflation heading in the wrong direction, heating up instead of cooling down. What we're seeing is month over month in January, prices rose by 0.5 percent, and as you mentioned, 3 percent annually. That's not a number that we have seen since the summer in June. And it really increased across all categories. Prices across all categories were on the increase.

But we look at three in particular that really resonate with everyday Americans shelter, food and energy. Shelter costs a 0.4 percent on the month, energy prices up 1.1 percent and food costs up 0.4 percent. This was food at restaurants, food at home, all on the rise. These categories are very important, particularly shelter, because that accounted for 30 percent of the monthly increase. And, of course, Phil, that's the most amount of money that Americans are paying every single month.

This is not a great picture for January. Americans are going to want to see these numbers trending in the other direction, Phil.

MATTINGLY: You're pointing out food prices, but we got to talk about eggs. We've been talking about eggs. Eggs are still a significant issue. And that -- boy, was that underscored in this report. What are we seeing?

YURKEVICH: We saw it right at the top of the report. The Bureau of Labor Statistics wanted to point this out, because eggs, month over month, rose 15.2 percent. They had never seen that number rise so fast since June of 2015. And then year over year, eggs up 53 percent.

But we shouldn't necessarily be surprised by this, because we have been reporting on the deadly avian flu that has killed millions of birds. And because of that, there have been egg shortages, and thus prices of eggs have increased.

Now, I've been speaking to a lot of agricultural experts asking them, what is to be done about these prices? They say, the Biden administration couldn't control prices. The Trump administration will not be able to control prices, but there are some things that they can do on a funding level to try to understand what's going on with this virus and trying to understand if it can be controlled, more funding for surveillance and research and potentially, Phil, vaccines. This is controversial because if you start vaccinating birds, that means that the virus is now labeled endemic, which means that other countries potentially won't want to trade with us.

So, a lot of controversy around that, but hearing from agricultural experts and farmers that something needs to be done at a federal level to at least look at this, maybe not control the prices, but look at this and try to see if we can get these egg prices in particular under control.

Phil, just an anecdote for you, in our own building in the cafeteria, I just saw a sign that said no fresh eggs today because of the egg shortage. So, it is widespread. Americans are noticing and it's reflected in the CPI report here today.

MATTINGLY: Yes, no question about it. Vanessa Yurkevich, as always, thanks so much. Let's discuss now. With President Trump's top economic advisor, Kevin Hassett, the director of the National Economic Council. Kevin, I appreciate you being here.

KEVIN HASSETT, WHITE HOUSE ECONOMIC ADVISER: Oh, thanks. Good to be here. Yes.

MATTINGLY: We have heard repeatedly over the course of the last couple months from the president when he talks about the politics of winning the campaign, there's a number of different reasons he points to, but he always comes back to grocery prices. So, it's not exciting necessarily, but maybe it wasn't the message that he always wanted to talk about. But that was the difference. Grocery prices are up, in particular eggs. What can the administration do?

HASSETT: Right, well let's just talk about the top line news today. And I got to tell you that we've got an all of the above strategy to reduce inflation, including getting the macro economy right, and getting you know, it's smaller things right, like egg prices.

But let's go to today's number. What we learned is that overall inflation is running about 4.5 percent over the last three months, which kind of closes the book on the disastrous Biden economy, where, you know, we just learned that jobs were revised down by a whole million over the last year, so they kept overstating how well the economy is doing on that end.

And now we see that, you know, even though Austan Goolsbee, you know, the Democratic person who's now working with the Fed is out there saying inflation is under control, that inflation is not under control because the Biden and the Democrats spent so much money.

And so what we're doing is, at the top end, we're focusing on getting spending under control and having supply side tax cuts and regulatory policies and drilling and so on, so that there's a lot of supply, reduce demand, that's how you get prices down.

At the more microeconomic level, if you'd like, I could talk about all the work we've been doing on the avian flu to help get egg prices under control. But don't forget that the reason why there are no eggs at the stores, the reason why that happened is that Joe Biden's team didn't have an avian flu strategy at all. They were just killing chickens willy-nilly. They killed 130 million chickens going into the late part of last year, 130 million chickens rather than come up with an avian flu strategy.

So, again, it's another example of how the Biden administration failed at the macro level. They failed at the micro level, and that's why the American people have brought President Trump into the White House.

MATTINGLY: Can I stick on the macro level for a minute? Because your agenda is very clear, the president has not been subtle about what he wants to do. Obviously, we see what's happening on Capitol Hill as they start to move forward on what they plan to be the tax cut or the extension, at least the tax cuts on that end. The president this morning on his social media account saying that rates need to come down, which will go well with the upcoming tariffs.

The Fed usually, when inflation is high, you would think that they would either hold steady or push rates up. Tariffs are traditionally considered inflationary. The tax cuts you're talking about are stuck in a legislative process that you know better than anybody, having been here for a long time, might take longer than anybody wants.

So, in the near term, how do tariffs and jawboning the Fed change the trajectory of things?

HASSETT: Oh, we're not jawboning the Fed at all. What we're doing is taking actions, aggressive actions, to lower interest rates. So, if you look at it, over the last week-and-a-half, as we've revealed the runaway spending and almost malicious spending errors of the Treasury Department under Janet Yellen, that the ten-year Treasury rate has dropped by about 40 basis points and remains well below where it was before we came in and started to announce our plans.

And so the macroeconomic policies of President Trump are already working and we did an estimate before today's CPI shock that we already, just in the last week, by announcing the spending cuts that Elon Musk and everybody are managing through DOGE, had saved American taxpayers $40 billion in interest payments with the lower ten-year rate. And so, absolutely, interest rates are coming down and inflation is coming down. And as inflation comes down, the Fed could do what it wants to do. But the bottom line is our supply side policies that are micro policies are going to lower inflation and they're going to do it. And you can already see that in the ten-year market right now.

MATTINGLY: Before I let you go, I do want to ask about what the president said this morning, those upcoming tariffs, the reciprocal tariffs, everybody's waiting to see what they actually look like in practice. I think there's been talk that they won't just be kind of a tariff for tariff match. It will also address country's other trade barriers, whether it's VAT taxes or subsidies as well. And a two- parter, does this mean that kind of the across the board ring tariff that the president was talking about during the campaign is no longer on the table, this will be the effort?

HASSETT: The president is pursuing tariff policy in many dimensions and reciprocal trade is something that he's talked about ever since I first met him in 2017.

[10:10:02]

And I even just had some negotiations with foreign leaders today on the matter.

And so there's a lot of development going on, but nothing hard news to announce right at this moment.

MATTINGLY: So, they're not coming today?

HASSETT: Well, we had a discussion today and the president has a clear view on what he wants, but we'll see how it all works out.

MATTINGLY: You can always feel free, Kevin, to highlight the details of what the president thinks.

HASSETT: Of course. But I do want to come back and talk to you about avian flu, because very soon everybody's going to see a plan to get ahead of the curve on this thing. And we've been working on that 24/7. And, again, the Biden administration had absolutely no plan for the avian flu other than just killing chickens senselessly and we're going to fix that and we're going to fix it soon. This is pretty much --

MATTINGLY: Can you outline kind of --

HASSETT: -- is confirmed, we're going to -- the Ag Department is going to be all over this.

MATTINGLY: And I think that she's supposed to be moving forward in the Senate this week. The pillars of that plan, can you top line kind of how you guys are thinking about the approach?

HASSETT: We'll have more on that soon. But I could tell you the plan is very well formed right now and will be finalized in the coming week,

MATTINGLY: Kevin, last one before I let you go. You mentioned kind of the Treasury Department, what the DOGE team has been looking into there. I know there's been a back and forth with op-eds and I listened to what you were saying about that op-ed from five Democratic Treasury secretaries on CNBC earlier this week. You said malicious was kind of the way you frame the spending. You know, the Bureau of the Fiscal Service. They can only kind of approve or disprove. They don't have a lot of the options. The agencies are the ones who are supposed to flag. There's a do-not-pay list. Part of the reason the do-not-pay list isn't as fulsome as it's supposed to be is Treasury doesn't have access to a lot of the databases. So why are you pinning this on Treasury as being kind of the malicious actor?

HASSETT: Well, it's not. You're right, that it's not just Treasury. Because what's happening -- what happened to the Biden administration is cabinet agencies all over the government would tell the Treasury to pay stuff and then the Treasury would pay it without inspection. And the point is that there are still some things that they're supposed to communicate to the Treasury before the Treasury cuts the check. And those things weren't given to the Treasury even.

And so what we're doing is we're unwinding it all the way back to -- but you're right, that in the end, there's somebody somewhere in some other agency that's deciding to tell the Treasury to send money to someone who they don't say who it is, and they don't say why they're spending it. And we're totally getting on top of that.

And everybody's like, oh, DOGE is controlling the Treasury. Again, I don't think there are more than a handful of people at Treasury who are just helping us, and they have read-only access to the data. They're just looking at the data trying to find what's been going wrong and help us fix it. The treasury secretary is on the ball, and with a couple of I.T. guys, they were able to outperform the hundreds of thousands of people in the U.S. government that looked the other way while our government was wasting American taxpayer money. It's unacceptable, all of us, that that was going on and we're going to stop it.

MATTINGLY: Kevin Hassett, I appreciate your time, sir, as always. Thanks so much.

HASSETT: Thank you, great to be here. Thanks.

MATTINGLY: Well, it was a surreal scene just behind where Kevin was standing inside the Oval Office. Elon Musk, we were just talking about him, with his son in tow or on shoulders, joining President Trump to address reporters and defend his DOGE agenda, standing next to the same Resolute Desk that a recent TIME Magazine cover depicted him behind.

The world's richest man downplayed concerns over potential conflicts of interest, as well as his outsized and unelected role in the administration.

Musk also offered, without evidence, numerous instances of fraud and waste his DOGE team has identified, even issuing this surprising concession when pressed on some of those claims.

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ELON MUSK, DEPARTMENT OF GOVERNMENT EFFICIENCY: Some of the things that I say will be incorrect and should be corrected. So, nobody's going to bat a thousand. I mean, any -- you know, we will make mistakes, but we'll act quickly to correct any mistakes.

(END VIDEO CLIP)

MATTINGLY: Here now to take Elon Musk up on that offer is CNN Senior Reporter Daniel Dale. Daniel, let's start with this luxury hotel story that Elon Musk has been talking about. A number of administration officials have been accusing FEMA of violating the law by sending $59 million dollars intended for disaster relief to New York in order to house migrants in, quote, luxury hotels. What's happening here?

DANIEL DALE, CNN SENIOR REPORTER: So, things are murky here, Phil, because they have not released a lot of details. But as far as we can tell, this was not actually disaster relief money. This is the same fact check we did after Hurricane Helene, when many Republicans were making such claims. This $59 million came from a program called the Shelter and Services Program, entirely separate from disaster relief funding, in which Congress specifically appropriated money for states and cities to help with to house the surge of migrants who came in during the latter part of the Biden administration.

Now, what we know from New York officials is that the latest payment of about $59 million included about $19 million, they say, they use for hotels. They say none of that money went to luxury rates. They said we do not pay luxury rates. We put them in more modest accommodations. I can't independently confirm that, but I think we should wait for evidence from DOGE and the Musk team before we believe it.

MATTINGLY: Yes, transparency, evidence, we're all for it. You display better than anybody.

The concession from Musk being incorrect came following pushback over claims from him in the White House about condoms to Gaza.

[10:15:06]

What's the reality there?

DALE: Yes. So, you know, people might hear that and say, oh, well, it's a candid admission from a rich, powerful man. He said, sometimes I'm wrong. Certainly, we're all sometimes wrong. But he said, we correct claims quickly. Well, this candid admission came more than two weeks, or it came two weeks after this claim, false claim was made by the White House press secretary, made headlines around the world, and then repeated and further exaggerated by the president. The president made it $100 million in condoms for Hamas. The reality is there is no evidence of any condom money going to Gaza or Hamas.

Now, Mr. Musk was informed by a reporter there, actually we found out the money was condoms for Mozambique. There's not even evidence of any condoms going to Mozambique. This Mozambique project that some people thought the White House might have confused because Mozambique has a province called Gaza, that was not a condom initiative. That is a comprehensive public health initiative aimed at combating HIV and tuberculosis.

So, Musk respond and said well, sometimes I'm wrong, but I don't think we should be sending 50 million condoms anywhere. We're not sending 50 million in condoms to anywhere.

MATTINGLY: Ah, the classic correction to the correction that's necessary for corrective action.

Right now, there's a DOGE subcommittee. They're holding a hearing on Capitol Hill. Musk also touted DOGE's transparency. Let's play some of that exchange.

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REPORTER: The White House says that you will identify and excuse yourself from any conflicts of interest that you may have. Does that mean that you are, in effect, policing yourself?

MUSK: Well, we actually are trying to be as transparent as possible.

Well, all of our actions are fully public.

Transparency is what builds trust, not simply somebody asserting trust.

(END VIDEO CLIP)

MATTINGLY: The transparency, they have an X account, follow it, I cover DOGE, don't necessarily feel that's actually the case, but what do you know? DALE: Yes. So, pros, that he is posting a lot on X about some of the stuff they're doing, pros, he did stand there and take questions, to his credit. That is an element of transparency. A bunch of cons, though, first of all, he's been set up with a government status that does not require him to make any financial disclosure. The White House is trying to shield this entire effort from public records laws, from FOI requests, using a special status under the Presidential Records Act. And he's responded harshly and inaccurately, even when people have tried to note who is working for this effort, so basic disclosure, the names of people. He accused someone on X of committing a crime just for mentioning those people's names. So, that's certainly not the spirit of transparency, Phil.

MATTINGLY: And then he afterwards mentioned their names and re-- tweeted.

DALE: Oh, I don't think I didn't even see that.

MATTINGLY: Very proud of their efforts. Engineering-wise, look, it's said to be a talented team. All right, we're going to have to keep watching.

I'm all for questions to your point. Taking questions like yesterday is helpful because there's a lot that I think we're trying to figure out right now.

Daniel Dale always helping us do it, thanks.

Well, coming up, we'll go to Capitol Hill. The House DOGE Committee, we just showed you, holding a hearing right there, what they're calling the quote war on waste. We'll be back in a moment.

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[10:20:00]

MATTINGLY: Well, happening right now on Capitol Hill, you see it right there, the DOGE subcommittee holding a hearing as Elon Musk's team continues to ramp up their efforts to upend government.

I want to go to CNN's Lauren Fox. Lauren -- actually I'm going to go to Senator Chris Van Hollen. Lauren is great too. Senator Van Hollen deals with Lauren quite often, but he's going to be stuck with me right now. Senator, I appreciate your time this morning. I know there's a ton going on.

You know, what was interesting is I was kind of thinking through what I wanted to ask you here. I went on to look through your press releases over the course of the last couple of weeks, and the number of them, I mean, it's like eight or nine in a row across every different element of the federal government raising concerns about what DOGE is doing. The scale of this right now, how do you decide what to focus on, what to try and counter, what to call investigations into?

SEN. CHRIS VAN HOLLEN (D-MD): Well, Phil, it is good to be with you. There is a common theme to what's going on across all these agencies, and that is that President Trump has illegally installed Elon Musk to conduct a raid on U.S. government agencies, not for the purpose of efficiency, but for the kind of purposes that you've seen. For example, they now have access to the personal private data of millions of Americans. They told the folks at the Consumer Financial Protection Bureau, these are the cops on the beat to look out for consumers when they're scammed, they told them not to come to work. That means more scammers can take advantage of the American people.

The common theme is implementation of Project 2025. Phil, you may remember on the campaign trail when he was asked about it, President Trump was like, Project 2025, what's that? But Elon Musk is now doing the dirty work for that. Russ Vought, who is the architect for 2025, has now been installed as the head of what's called the Office of Management and Budget in the White House. That's the command and control center for the budget over all federal agencies. So, implementation of the very unpopular Project 2025 is the common theme connecting all of these actions.

MATTINGLY: You know, you mentioned the newly confirmed OMB director, who also controls OIRA, kind of the levers of government right now, both from Senate-confirmed officials, appointed officials, and then kind of the quasi group that Elon Musk is running.

The biggest question I have since Democrats are in the minority in the House and the Senate has been, is there any recourse, or is it almost entirely based on the courts to try and stop what you're talking about? The CFPB, Republicans have long opposed the CFPB, have long tried to figure out a way to suffocate the agency's existence.

[10:25:05]

Now, they're actually doing it.

VAN HOLLEN: Well, that's right. Look, there are three lines of defenses, but the most immediate line of defense are the courts. When you see this much illegal activity going on all at once, the courts have to be the first to react. And I've been working very closely with the lawyers bringing these cases in the courts.

And we have seen so many temporary restraining orders issued in just the last few weeks. That's a reflection of the scope of illegal activity going on by the Trump administration that thinks that it can use executive orders to make sweeping changes that really have to go through Congress.

Now, you mentioned this congressional hearing. I would love to see them put up DOGE and Project 2025 for a vote in the U.S. Congress. I predict it would go down. It's very unpopular, which is why they're using these illegal means, not going through Congress, but through executive orders to try to do it.

Donald Trump knew this was unpopular on the campaign trail, that's why he ran away from it. Now, he's got Elon Musk doing his dirty work.

MATTINGLY: Yes. As someone who's following as many of those court cases as I can, I do have to wonder how the actual legal costs balance out with any cost savings that are discovered by DOGE at this point.

I do want to ask, you're also a leading voice in your caucus on foreign policy issues. On the issue of Gaza, President Trump making very clear his initial proposal, controversial proposal in Gaza to relocate Palestinians, redevelop the land into prime real estate. It was not just a kind of a trial balloon. Listen.

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DONALD TRUMP, U.S. PRESIDENT: There is nothing to buy. It's Gaza. It's a war-torn area. We're going to take it. We're going to hold it. We're going to cherish it.

REPORTER: And, Mr. President, take it under what authority? It is sovereign territory.

TRUMP: Under the U.S. authority.

(END VIDEO CLIP)

MATTINGLY: Senator, what's so striking, he was sitting next to King Abdullah of Jordan, a very close ally of the United States. Arab states very opposed almost immediately to what the president had laid out. How does this go from here?

VAN HOLLEN: Well, Phil, what the president has done is he has lit a fire and thrown it on a keg of gasoline, because what's happening in Gaza, what's happening in the Middle East is already a tinderbox. It's already on fire.

And what he is doing is going to spread that fire. He has essentially called for what amounts to the ethnic cleansing of Gaza, the forced removal of 2 million Palestinians to other areas. King Abdullah in Jordan and, of course, Egypt have said not only is that repulsive from a moral perspective and a legal perspective, it will also destabilize their countries.

It has emboldened, Phil, the farthest extreme right voices in Israel, people like Ben-Gvir, people like Smotrich. These are people who have been waiting for the opportunity to essentially find a way to move those Palestinians out of Gaza and, frankly, they'd like to move them out of the West Bank.

So, what President Trump has done, he came in saying he was going to enforce this ceasefire agreement. He has made it much harder to move to the next phase.

I hope we can do it. They were helpful. His -- Steve Witkoff was helpful in getting stage one implemented. But now President Trump has made it harder to complete the job despite the fact that he claimed that what he wanted to do was bring peace to the region. He's done the opposite.

MATTINGLY: Are you surprised? There are people in kind of the Trump orbit that you are never surprised when they immediately jump to support whatever the president says. I was reading what your colleagues, Republican and Democrat, were saying in the chamber after that proposal, and Republican allies were very surprised, were very kind of candid, at least in that moment, saying this isn't really a thing that can work.

One who wasn't, though, was the secretary of state, Marco Rubio, who you served with in the U.S. Senate, who was on the committee with you. Are you surprised how quickly he got behind the proposal?

VAN HOLLEN: Look, my one vote I cast for a member of the Trump cabinet was for now Secretary Rubio. I regret to say that I regret that vote, because once installed in office, he is essentially abandoning the positions that he took here as the United States senator. That's when he's in control. I mean, he's not in control of AID. Elon Musk is doing that. You know, Rubio said he was going to consult with us on the AID situation at the very time Elon Musk was lighting it on fire.

So, yes, I've been extremely disappointed in the actions of Secretary Rubio, including jumping on board on this insane, wrong idea, which effectively is calling for ethnic cleansing in Gaza, because the president said he would be willing to use the military to do it.

[10:30:00]

MATTINGLY: Maryland Democratic Senator Chris Van Hollen, I appreciate your time, sir. Thanks so much.

VAN HOLLEN: Good to be with you, Phil. Thanks.

MATTINGLY: Well, right now, we've been talking about it.